PUBLISHER'S VIEWPOINT
September 2001
Downturn Mystery Solved!

Where’s the downturn?” I wrote a couple months ago. Being a tad obsessive-compulsive, I have kept after the downturn mystery. This mystery has many manufacturers reporting declines in real sales in 2001, while the operators seem to be holding their own, and many dealers tell us they are up or no worse than flat.

This is all very important to us at this fine magazine. We’ve been looking at some ugly numbers. Patterson Advertising Reports shows equipment advertising pages for the 15 magazines we track off 21.4% in the first six months of 2001. Add services to the mix—and take out some catalogs and special supplements—and the market is off 32%! Fortunately, we at <bi>FER<bi> are off the least of the 15 magazines, thank you all very much. But still, we like growth, too.

So, I kept on looking. And I think I’ve found the problem. Or rather, four problems:

Problem One:  Regional meltdowns. I spoke at the board of directors meeting of MAFSI, the rep’s group, in Asheville, N.C., in late July. They did a clever thing, polling each of their 20 regional directors on comparable sales for the first half 2001 vs. 2000. Twelve of the regions were up, three were flat, five were down. Average the 20 percentages—statistical nonsense, but hey—and you get +1.6%. The median was between gains of 4% and 5%. But, four of the down territories were double-digit declines, and were all in California and the Northeast. The energy crisis in the West and stock market and high-tech declines in the Northeast are overcoming E&S gains in other markets, since these markets are so big.

Problem Two:  The strong dollar, beef problems in Europe and uncertainty in developing markets are all clipping the export market for American-made E&S.

Problem Three:  A number of the big QSRs and several second-tier casual dining chains are having problems of various kinds. It only takes a few big gorillas to get the burps to cause problems.

Problem Four:  Both operators and chain-oriented manufacturers and dealers tell us there are not many big menu rollouts taking place this year. With so much of the chain market relatively mature in new-unit growth, menu rollouts are critical.

Okay. I’m satisfied. But I remind all of you things are not really that bad, except for us magazines. I maintain the total E&S market is off no more than a couple of points, and my supplies-oriented friends confirm this. And given the record years we’ve recently experienced, let’s stay upbeat and have a party at NAFEM/01.

Cheers,

Robin Ashton
Publisher